Why Dunkin' Donuts Is Failing in India - YouTube

Dunkin' is synonymous with breakfast pretty much everywhere you go. There are

more than 12,600 restaurants in 46 countries from Kuwait to Aruba.

But there is one market where the company is failed to capture national

attention, India. As of 2018, it closed more than half of its stores in just

over two years, citing a lack of profitability and operational efficiency.

So what went so wrong for Dunkin' in India? To answer that let's go back to 2012,

when Dunkin' launched its first location. Dunkin' granted exclusive

franchising rights to Jubilant FoodWorks, the same franchisee that brought

Domino's Pizza to India, one of the top restaurant brands in the country. Dunkin'

entered with its typical breakfast first strategy and it braced for heavy traffic

at the start of the day. But it didn't take long to figure out that Indians

weren't all that interested in the American morning routine. The majority of

Indian consumers don't prefer to grab-and-go their breakfast.

They'd rather have a sit-down meal. Yeah basically when you look at doughnuts.

So basically when Dunkin' Donuts came to India it's it's regarded as a breakfast

for all the Western countries or wherever the Dunkin' Donuts have their

outlets. But in India, it's the consumer preferences are totally different. So

here, people you know they generally prefer their local cuisine for their

breakfast. And it wasn't just the timing of the offering, it appeared to be the

menu itself. To be fair, Dunkin' tried to localize its offerings. It had custom

doughnuts catered to Indian tastebuds, like the mango doughnut. It had Lychee

coladas. And for a brand that rarely ventures outside its core product, Dunkin'

even rolled out a spicy sandwich lineup. In an effort to localize its menu, this

coffee loving brand even downplayed its beverage branch of business, which

accounts for about 60% of Dunkin sales. Instead, it marketed its food to a nation

that's not exactly crazy about coffee. But it wasn't enough to help Dunkin'

shake its doughnut first reputation. Dunkin' was seen as more of a pastry shop

and Indians didn't want to start their day with sweet baked goods.

Doughnut is basically considered as a desert right and a desert which is a lot of other

assortment added onto it so it's a high calorie

assortment. And therefore, it's more like a luxury. It's more like impulse kind of a

purchase. Which you make if you are celebrating or is there a special

occasion or you know once in a while Indians having a switch tooth would like

to indulge in that kind of a purchase. So Dunkin' pivoted. It pushed it's

operating hours later, it rolled out its Diwali doughnut, which touted savory

flavorings like chickpeas, saffron and chilly. But key Dunkin's tweaked image,

was actually to downplay the doughnut. So it tried something it hadn't done before,

burgers. With burgers, Dunkin' was able to get more foot traffic in and the non

beef lineup was designed to appeal to the country's vegetarians. But making

burgers the anchor product of the brand, just appeared to dilute Dunkin's image

rather than help it. Decided advertising on burgers rather than doughnuts.

I'm gonna need to go global brand wind doughnut in your name. You cannot say that

we are not doughnuts than here's something else, right? So that's really against the

basic rule of marketing, which is focus. In a statement to CNBC, Dunkin' Brands

said that it finds it important to include core Dunkin' products alongside

more regional menu items to cater to local tastes. But Dunkin' didn't comment

on its store closures in India. Another potential misstep had nothing to do with

the menu. Dunkin' expanded too fast, its locations were too big and those huge

retail spaces translated into higher operational costs. So when Jubilant

FoodWorks announced plans to pare back more Dunkin' shops in 2018, it came as

little surprised that its new plan was to focus on small stores and kiosks. But

keep in mind, Dunkin' isn't alone in its struggle with the doughnut.

Dunkin's main doughnut rivals, Krispy Kreme and Mad Over Donuts, entered

the market within a few years of one another and at first things were pretty

great. Doughnuts were initially a hit when they were first introduced into the

Indian market. The young population which was more acceptable to American tastes

and culture. And so for them it was the issue of novelty and therefore, doughnut

market saw a surge in the in in the Indian, you know, subcontinent and

we had Dunkin Donuts, which entered the market at that point of time and we all

know the drive, right? From 22 stores, they reached up to 77 stores in 2017. Which

was the peak of Dunkin Donuts in India. But Aggarwal said that the donuts

popularity has started to stagnate and now the doughnut chains of India are

feeling the pressure. The doughnut is struggling. It's not just Dunkin' and

Krispy Kreme. There have been declining sales across doughnuts for quite some

time. Not just in India but if doughnuts were working they would be Dunkin'

Donuts doughnuts but they're now just Dunkin'. And so that's if it's not working

here, it's it's certainly not working in India. That precipitous fall in the

popularity of the doughnut is partly to do with the more health-conscious India.

India's becoming a very health conscious market, right? So people are moving away

from sugar and salty food and looking for more healthier options. So that's one

of the reasons why I feel that the sales have kind of stagnated.

But even though Indian consumers are looking for healthier foods, some desert

chains in the country aren't struggling like Dunkin'. In fact, one of Dunkin' Brands

other businesses, Baskin-Robbins, is killing it in India. Baskin-Robbins which

is franchised in India by Graviss Group, has more than 725 stores in the country

and claims to be the largest ice cream chain in India. So if Baskin-Robbins

and Dunkin' are two fruits from the same tree, then why is one doing so much better

than the other in India. Euromonitor says it's because Baskin-Robbins focused on

its signature product, ice cream. And according to a Mintel report, the ice

cream industry is heating up in India. Mintel estimates that in 2021 657.2

million litres of ice cream will be purchased in India. But doughnuts well

they're just not a favorite for the adult Indian consumer. So Dunkin's big

problem in India seems to have more to do with the fact that it's failing to

give Indian consumers what they're looking for and less to do with any

mistake made by either Dunkin brands or Jubilant FoodWorks. Take Dunkin' Brands,

the company in the United States is by no means failing. The company has seen a

steady grow than revenues over recent years.

The Indie market isn't biased against international companies, more

specifically, Dunkin' Brands because Baskin-Robbins has seen such success in

India. And Jubilant FoodWorks, which franchises Dunkin' in India, also

franchises Domino's Pizza, one of the most popular brands in the country. It's

also not the first time an international Dunkin franchise agreement has flopped

either. Dunkin' has tried and failed to enter China twice. And in 2015 it decided

to step back in a third time with a better understanding of what Chinese

consumers want and an ambitious goal to open 1,400 restaurants. So will Dunkin' in

India have the same story as Dunkin in China? or will it be able to turn things

around? Experts say it's certainly worth trying. With the population size second

only to China, India is thought of as the last great battleground for

international fast food rivals. Only about three percent of all food service

establishments there are chained. In Western markets, it's over 50 percent. So

if you're looking to capture market share in the U.S., you have to take it away

from somebody else. But if you enter India in the right way, with the right

formula, there's tremendous potential upside. And reducing store sizes is part

of that formula. For the U.S. store, they have been reducing their sizes, store

sizes, which which is the same strategy which was being followed by Mad Over

Donuts or Krispy Kreme. The brand slashed unprofitable stores and instead

started focusing on small kiosks to sell their products. And remember how they

basically ignored their beverage unit when first entering the country, that's

not happening anymore. They're planning to introduce more teas to their menu to

cater to Indian. Tastes they're probably better off on the hot beverage focused

side of it than trying to localize the menu to get away from it being

donuts. So yeah, Dunkin' in India has had to overcome

a lot upon entering the market and it still does. But by adding tea based

beverages to their menu and offloading unprofitable stores for kiosks, Dunkin'

may be able to save itself in India after all.